Washington Post 2006 Annual Report Download - page 80

I. LEASE AND OTHER COMMITMENTS 20 MHz of spectrum, which can be used to provide a variety of
advanced wireless services, in areas that cover more than 85% of
The Company leases real property under operating agreements. the homes passed by the cable division's systems. Licenses for this
Many of the leases contain renewal options and escalation clauses spectrum have an initial 15-year term and 10-year renewal term
that require payments of additional rent to the extent of increases in and require proof that they have provided substantial service by the
the related operating costs. end of the initial license term.
At December 31, 2006, future minimum rental payments under non- In February 2007, Kaplan announced an agreement to acquire
cancelable operating leases approximate the following (in EduNeering Holdings, Inc., a provider of knowledge management
thousands): solutions for organizations in the pharmaceutical, medical device,
2007ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $109,343 healthcare, energy and manufacturing sectors. Headquartered in
2008ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 98,345 Princeton, N.J., EduNeering will become part of Kaplan Profession-
2009ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86,879 al. The acquisition is expected to close in March 2007.
2010ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 75,370
2011ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 59,309 In November 2006, the Company completed the sale of the
ThereafterÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 197,403 Company's 49% interest in BrassRing. The pre-tax gain of $43.2
$626,649 million resulting from this transaction, which is included in ""Other
income, net'' in the Consolidated Statements of Income, increased
Minimum payments have not been reduced by minimum sublease net income by approximately $27.4 million and diluted earnings per
rentals of $4.1 million due in the future under non-cancelable share by $2.86.
subleases.
In December 2006, the Company completed the sale of the
Rent expense under operating leases included in operating costs PostNewsweek Tech Media division, which was part of the Compa-
was approximately $116.9 million, $113.0 million and $97.6 mil- ny's magazine publishing segment, and recorded a $1.5 million
lion, in 2006, 2005 and 2004, respectively. Sublease income was loss.
approximately $1.9 million, $0.8 million and $0.6 million, in 2006,
2005 and 2004, respectively. During 2005, Kaplan acquired 10 businesses in its higher educa-
tion, professional and test preparation divisions for a total of
The Company's broadcast subsidiaries are parties to certain agree- $140.1 million, financed with cash and $3.0 million in debt. The
ments that commit them to purchase programming to be produced in largest of these included BISYS Education Services, a provider of
future years. At December 31, 2006, such commitments amounted licensing education and compliance solutions for financial service
to approximately $162.1 million. If such programs are not pro- institutions and professionals; The Kidum Group, the leading provid-
duced, the Company's commitment would expire without obligation. er of test preparation services in Israel; and Asia Pacific Manage-
ment Institute, a private education provider for undergraduate and
J. ACQUISITIONS AND DISPOSITIONS postgraduate students in Asia. In addition, on January 14, 2005,
The Company completed business acquisitions totaling approxi- the Company completed the acquisition of Slate, the online maga-
mately $143.4 million in 2006, $156.1 million in 2005 and zine, which is included as part of the Company's newspaper
$63.9 million in 2004. All of these acquisitions were accounted for publishing division. Most of the purchase price for the 2005
using the purchase method, and accordingly, the assets and liabili- acquisitions was allocated to goodwill and other intangibles, and
ties of the companies acquired have been recorded at their estimat- property, plant and equipment.
ed fair values at the date of acquisition. The purchase price During 2004, Kaplan acquired eight businesses in its higher educa-
allocations for these acquisitions mostly comprised goodwill and tion and professional divisions for a total of $59.6 million, financed
other intangibles, and property, plant and equipment. with cash and $8.7 million of debt. In addition, the cable division
During 2006, Kaplan acquired 11 businesses in its higher educa- completed two small transactions for $2.8 million. In May 2004,
tion, professional and test preparation divisions for a total of the Company acquired El Tiempo Latino, a leading Spanish-lan-
$143.4 million, financed with cash. The largest of these included, guage weekly newspaper in the greater Washington area. Most of
Tribeca, a leading provider to the Australian financial services the purchase price for the 2004 acquisitions was allocated to
sector; SpellRead, originator of SpellRead Phonological Auditory goodwill and other intangibles.
Training, a reading intervention program for struggling students; The results of operations for each of the businesses acquired are
Aspect Education Limited, a major provider of English-language included in the Consolidated Statements of Income from their
instruction in the U.K., Ireland, Australia, New Zealand, Canada respective dates of acquisition. Pro forma results of operations for
and the U.S.; and PMBR, a nationwide provider of test preparation 2006, 2005 and 2004, assuming the acquisitions and exchanges
for the Multistate Bar Exam. Most of the purchase price for the occurred at the beginning of 2004, are not materially different from
2006 acquisitions was allocated on a preliminary basis to goodwill reported results of operations.
and other intangibles.
In December 2006, the Company participated in the FCC's
Advanced Wireless Service auction and purchased approximately
64 THE WASHINGTON POST COMPANY